phân tích để làm rõ những sai lầm của vinashin trong lĩnh vực quản trị tài chính doanh nghiệp e

No
Part 1
1.1
1.2
1.3
Part 2
2.1
2.1.1
2.1.2
2.1.3
2.1.4
2.2
2.3
2.4
Part 3
3.1
3.2
3.3
3.3.1
3.3.2
Part 4
4.1
4.2
4.3
4.4
Part 5

APENDIX
Introduction
Intrduction about VINASHIN
An overview of the economic group Vinashin

The process of formation
Development
Financial analysis group VINASHIN
Index
Flexible index
Ratio of curent payment
Ratio of quick payment
Ratio of cash payment
Indicators of asset management
Leverage ratio
Profitable ratio
The failure of VINASHIN in financial management
enterprise
Overview of incident
The result of incident
The cause of the incident
Objective reasons
Subjective reasons
Experimental lessons about management taken out from
default VINASHIN
Lessons about decentralization
The lesson of the investment capital management - to avoid
scattered investment, loss of control
The lesson of the inspection and supervision of the approriate
authorities
The lesson of management capacity
Conclusion
References
INTRODUCTION

Pages
3
4
4
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7
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11
11
12
13
13
14
18
18
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19
19
20
21

Vietnam economy is on the rise, import- export demand is growing, especially when

Vietnam's integration with the economy and become the 150th member of the International
Trade Organization WTO. Although shipping market at home and and abroad have certain
difficulties currently, huge opportunities for growth is also latent. Vinashin Group was founded
with a vision is the leading shipbuilding industry in Vietnam. Prime Minister Nguyen Tan Dung
1


said on date that Vinashin converted in group model "Vinashin must be the core of the
shipbuilding industry in Vietnam." While Mr Pham Thanh Binh, Chairman of Vinashin at that
time said proudly: " a new red dot: Vietnam has made one’s appearance on the map of
shipbuilding industries world.
Being expected and invested a lot and , Vinashin has achieved initial success, Vinashin
brands is recognized on the international field , highly qualified labor, modern competence,
shipbuilding industry ‘s material facilities

has been perfected gradually

... these great

achievements expected to contribute significantly for purpose developing sea- economic of
Vietnam in an attempt to expoilt every condition advantages of a country having much of sea
and island..However, in the years 2008-2010, along with the plunge of the world economy in
general, the shipbuilding industry in particular, the vessel Vinashin also revealed its serious
weaknesses, especially in the work of corporate governance. Up to June 2010, total assets of
Vinashin was about 104,000 billion but total debt is 86 000 billion, chatered capital is not only
low but also utilized

therefore the accounts payable / equity ratio was nearly 11 times , fell

into financial imbalance seriously, was prone to be brought to ruin,manufacturing was brought

to a standstill, , workers changed jobs, nearly 17,000 people gave up their job, nearly 5,000
people lost their jobs.
Thus,why did Vinashin - from a powerful economic groups fall into a debt crisis? Vinashin
is likely to be recovered to avoid shipbuilding industry of Vietnam starting again from the
beginning,isn’t it? During the course of Corporate Finance with guidance with all his heart of
teacher Dang Ngoc Dai, group 2 has grasped lessons about financial management needing be
taken out after bankruptcy of Vinashin to complete essay of the group.
However, time and knowledge is still restricted hence group 2 wish nothing better than
getting the contribution of the teacher and classmates IeMBA. D01 to complete the essay fully.

PART 1: INTRODUCTION
ABOUT VINASHIN
GROUP
1.1 An overview of the economic
group Vinashin:
Vinashin
abbreviated

Business

VINASHIN

Group
is

an
2


economic group specializing in ship operation under public ownership .. Group was

established on 05.15.2006 on the basis of organization and rearrangement of the
Corporation of Vietnam Shipbuilding Industry.
Before restructuring was accomplished, the Group operates following model the parent
company – subsidiary company. Includes parent company is Vietnam Shipbuilding
Industrial Group, 24 subsidiaries, 6 associated companies and 10 joint- venture
company.
1.2 Process of formation:
- The predecessor of the group is 91 Corporation established in January 31, based on
Decision No. 69/TTg January 31st, 1996 of the Prime Minister about the establishment
of the Vietnam Shipbuilding Industry Corporation .
- On May 15, 2006, the Prime Minister signed Decision No. 103/2006/QD-TTg on
approving the pilot scheme to form an multiple ownership economic group, in which
Public ownership domitate , on the basis of arrangement and organization the Vietnam
Shipbuilding Industry Company.
- On May 15, 2006, the Prime Minister also signed Decision No. 104/2006/QD-TTg
about the establishment of the parent company - Vietnam Shipbuilding Industry Group.
Accỏding to this decision, the parent company -

Vietnam Shipbuilding Industry

Corporation was established basing on reorganizing management, operating agencies
an units member entering in the accounts of Vietnam Shipping Industry Company
seafood. This event marked the official birth of Vinashin.
1.3 Development:
When Vinashin was a newly formed organization,it was known as "steel punch"
of the economy. Vinashin is expected to be the core, the leading enterprise to develop
Vietnam shipbuilding industries still at a start and underdeveloped at that time, as well
as serving for the purpose expanding the Marine Economic, to meet the needs of
national defense and security of Vietnam. And indeed, since its inception in 1996 until
3

being converted into model of economic group, Vinashin reached many important
achievements:
- First step,significant technical and material facility of the shipbuilding industry was
formed synchronously with 28 shipyards operating with an advanced level of
technology, quality of ship products recognized all over the world , having brand name
and reputation in the shipbuilding industry in the world.
- 70,000 employees, in which 12,500 people have universitarian and above
universitarian academic standard , more than 55,000 technical worker with fair
qualifications, more than 5,000 people attain internationall certified.Technology was
designed , initially ,the technical design for 58,000 tons, 115,000 tons ships were made.
Supporting industries branches were built, advanced a step in the localization rate of
building and repairing ships.
- The annual average growth rate in 1996-2007 period reached 35% -40% / year, was
profitable, net sales in 2008 reached 29,000 billion. Until the end of 2009,Vinashin had
contributed 3,300 billion into the state budget . equity had just over 100 billion and only
can buid 1000-3000 tons the ship, until now, equity has increased to 8,000 billion, the
worth assets is 104,000 billio; can build 53,000 tons cargo, 105,000 tons tankers , ship
loading to 6900 cars, oil floating storage.
- Until March 2009, already had many orders and preliminary shipbuilding contract
agreement worth about $ 12 billion. 279 ships worth over $ 1.8 billion were completed
and transferred,including: 59 vessels with tonnage 6.500-15.000 tons;9 vessels with
tonnage 22.500-34.000 tons; 9 ships with tonnage 53.000 tons; 6 container ships, a
vessel can load 4900 cars, floating warehouses containing 150,000 tons of oil and many
other ships. Among the ships, 155 vessels valued at over $ 1.1 billion had been exported
to foreign shipowners; 124 vessels worth $ 700 million had been sold to domestic
owners. In addition, completing a variety of other aquatic facilities to meet diverse needs
of the economy and national defence and security.

4


- Ocean liner fleet with total load 700 thousand tons was formed from self-building and
purchasing of foreign countries.It contributed to increase the marine transportation
capacity of the country.
- Large plates, 150 ton derrick, 450 ton crane, 2,000 tons hydraulic press were
manufactured successfully;………. that five years ago must be imported 100%.
PART 2: FINANCIAL ANALYSIS OF VINASHIN GROUP
2.1 Index
2.1.1 Flexible Index
The index is used to measure the ability to convert liquid assets into cash the and short-term
debt solvency of investment and Petroleum Transportation shares company- Vinashin.

Liquid assets
Ratio of current payment=
Short-term debt
Unit: million

Quota
Cash and cash equivalents
Các khoản đầu tư tài chính ngắn hạn
short-term receivables
Inventory
Other short-term assets
Liquid assets
Accounts payable
Short-term liabilities
Ratio of current payment
Ratio of quick payment

Ratio of cash payment

2010
44.070.135.245
1.099.583.421.54
3
2.172.390.809.29
1
158.385.295.172
3.474.429.661.25
1
6.907.419.920.78
4
4.218.843.034.01
8
0,823550351
0,308624626
0,010446024

2009
5.453.573.892

1.429.198.028.894
647.890.059.581
25.370.443.990
2.107.912.106.357
5.683.458.544.923
2.387.876.671.739
0,882755852
0,611431094

0,002283859

2.1.2 Ratio of current payment :
- 2009 shows a short-term debt was only secured by 0.88 dong working assets, in
2010, a short-term debt was only secured by 0.82 dong working assets.
- Ratio of current payment of in period 2009 - 2010 decreases 0.0 59%. This ratio
decreased slightly due to increased short-term debt rate.
5


- This ratio shows lower solvency and also was a sign that companies use short-term
debt too much and warned about the financial difficulties
2.1.3 Ratio of quick payment :
Shows the solvency of a company. The ratio of payment VINASHIN the company in
period 2009 - 2010 decreased 0.30%
Quick Ratios of VINASHIN in 2010 was 0.61, indicating that the VINASHIN has 61%
liquid assets for every debt due to date. Quick ratio 0.61 billion, said that if the
company's inventory

is stagnant, not worth the company will fall into financial

difficulty called the "inability to pay." That the inventory of 2010 increased 3 times
compared to 2009 shows the VINASHIN will get financial difficulties in the future if
they do not remedial measures.
2.1.4 The ratio of cash payments:
Payment ability of company is quick, period 2009 - 2010 increased 5 times.
2.2 Indicators of asset management:
This ratio is used to measure the business activities of the company. To improve
the ratio of activities, we must know the property not used o not generate income, as a
result, companies need to know how to use them effectively or remove them. The ratio

of activity may be called the efficient ratio, or ratio of rotation.
Active ratio is expressed through the criteria:
Net Revenue
Turnover of accounts receivable =
Receivables
Net income
Inventory turnover =
Inventory
Net income
Rotation of fixed asset =
Fixed asset
Net Income
Rotation of total asset =
Total asset
Quota
short-term

Year
2010
1.099.583.421.543

Compare
2009
1.429.198.028.894

-329.614.607.351
6


receivables

long-term receivables

-

-

Fixed assets

3.398.343.709.334

3.693.818.828.108

-295.475.118.774

Total assets

6.917.335.636.819

5.825.413.550.112

1.091.922.086.707

Net sales

15.828.000.000

710.811.215.666

-694.938.215.666

Inventory

2.172.390.809.291

647.890.059.581

1.524.500.749.710

0.014

0.49

-0.48

0.007

1.097

-1.089

0.004

0.192

-0.187

0.002

0.122

-0.119

Number of accounts
receivable
turnover(times)
Number of inventory
turnover (times)
Efficiency of using
fixed assets
Efficiency of using
total assets

The number of receivables turnover: From 2009 to 2010, the number of receivables
turnover was reduced from 0.49 down to 0.014 times. The reason was

that the

company's net sales in 2010 decreased compared to 2009 was 694 938 215 666 VND,
and the short-term accounts receivable of the company also fell compared to 2009 was
329,614,607,351 VND.
Examining short-term receivables:
Quota
Short-term receivables
Receivables from customers
Prepayments to suppliers
Internal receivables
Receivable under the contract
schedule
The other receivables
Provision for short-term bad

2010
1.099.583.421.54
3
112.572.000
622.992.404.387

1.515.666.631
480.860.861.787
-5.898.083.262

2009
1.429.198.028.89
4
112.822.200.894
716.299.632.698
32.853.273.972

567.222.921.330

Compare
-329.614.607.351
-112.709.628.894
-93.307.228.311
-32.853.273.972
1.515.666.631
-86.362.059.543
-5.898.083.262

The amount receivable in 2010 decreased compared to 2009 was 112 .709. 628

894 so that it can be concluded that company could not sell more goods than in 2009.
On prepaid custo mers, in 2010 decreased 93,307,228,311 compared with 2009.
It can be said that companies worked more inefficiently than in 2009.
7


In terms of other receivables, in 2010 also decreased 86.362.059.543.compared
with 2009.
By considering the short-term receivables separately, we can see that companies
make business fall down. Therefore, if companies do not have good debt- recovery
regime, will lead to slow recovery of capital, capital of the company is nonmarketable
and the customer

appropriate capital .It will cause difficulties in the payment of

company.
On the number of inventory turnover ,in 2010 reduced compared to 2009 (from
1097timess in 2009, down 0.007 times in 2010). Reduced number of inventory turnover
proved that quality of product of enterprises is lower and lower so that the quantity of
sold goods is less, stagnant goods bring about a reserve account for inventory.It makie
the company difficult in revolving capital to expand production.
2.3 Leverage ratio:
Financial leverage ratio assess thelevel which a corporate sponsor for its business
operations by borrowed capitalt. For companies, financial leverage ratio will help
financial managers select the most reasonable capital structure for the company.Through
leverage ratio ,investors see the financial risks of company to decide investment
decisions.
Leverage ratio is expressed through the criteria:
Total debt
Ratio debt/asset =

Total asset
Quota
Total debt
Total assets
Ratio debt/asset

2010
6.907.419.920.784
6.917.335.636.819
0.99

2009

Compare

5.683.458.544.923 1.223.961.375.861
5.825.413.550.112 1.091.922.086.707
0.97

0.02

Ratio debt/asset
This ratio in 2010 increased 0.02% compared to 2009. This shows the percentage of
assets financed with loans of the company has increased
2.4 The index "Profitability":

8


This ratio measure the income of the company with other factors making a profit

as net sales, total assets and equity.
This ratio is shown on the criteria:
Net Income
Rate of Interest (TLL) =
Sales of goods
Income before taxes and interest of loan
The ratio of property income (TNTS) =
Total asset
Net income
Rate of profit on total assets(ROA) =
Total asset
Net Income
Rate of profit on equity (ROE) =
Equity
Quota
Goods sale
Incomes before taxes
Net revenue
Equity
Total assets
TLL
TNTS
ROA
ROE

2010
15.828.000.000
-171.113.797.796
-170.661.045.049
9.915.716.035

6.917.335.636.819
-10,78222423
-0,024736952
-0,0246715
-17,21116704

2009
710.811.215.666
6.010.902.023
6.010.902.023
141.955.025.189
5.825.413.550.112
0,008456397
0,001031841
0,001031841
0,042343707

Compare
-694.983.215.666
-177.124.699.819
-176.671.947.072
-132.039.309.154
1.091.922.086.707
-10,79068062
-0,025768793
-0,025703341
-17,25351075

Comments:
- Vinashin used too much short-term debt.

- Too much inventory.
- Indicators TNTS, ROA, ROE in 2010 were negative, the group lost .

PART 3: THE FAILURE OF VINASHIN IN FINANCIAL MANAGEMENT
ENTERPRISE
3.1 overview of incident:
9


Besides the great achievements that Vinashin has achieved, the group has also
infected many mistakes, that peak was the bankruptcy of Vinashin in 2010. The case not
only caused damage to private corporations but also harmed the economy directly.
In 2008, the global financial crisis makes the world economic decline, a number
of financial institutions, large economic group in the world with hundred years of
operation collapsed,; our economy
was affected sharply, export market
was narrowed, manufacturing is
sluggish, economic growth slowed
and;

Vinashin

was

affected

significantly, especially on markets
and capital.
Banks tightened lending, investment projects being implemented could

not

complete to enter in manufacturing due to lack of capital. Many shipbuilding contracts
signed could not continue to get loans to finish on schedule.
Ocean trafic industry was brought to a standstill, the master

canceled the

contract and the shipbuilding agrement worth more than 8 billion USD. In 2010 ,the
shipbuilding contracts were likely to be canceled coming up to 700 million USD.
On the other hand, the forecast is still inadequate, the project invests too much,
spread, beyond the capacity to balance finance. Some projects are not really necessary,
so many projects have only been allocated 50% of the total capital. Charter capital is
limited, its own capital in projects is very low, some projects are invested by 100%
loans. Therefore, most projects are in-progress, as the industrial parks clearance projects
of, export shipbuilding projects, these projects haven’t been enter to utilize but still
paying interest. Investment in fleet development including the purchase of too old
foreign ships, in- efficient operations. Develop business apidly, making capital
contribution outside the main business sector is so huge, loanning and guaranteeing for
lending associated companies, many units work inefficiently, do not pay their debts and
are uncontrolled. The inefficient use of capital has caused serious financial consequences
for Vinashin Group.
10


To resolve the difficulties mentioned, Vinashin had to borrow new debt to pay old
debt, long-term debt to pay short-term due to date, even use working capital to invest..
In 2009,as a result, Vinashin lost. By June 2010, total assets of Vinashin was about
104,000 billion, but total debt is
86.000 billion (in which there were

two major debt is $ 750 million
foreign debt guaranteed by the
Government and $ 600 million that
Vinashin borrowed foreign by
itself.

In

Vietnam,

Vinashin

borrowed from 10 banks in that
State-owned commercial bank is
main.low charterd capital was spreaded therefore ratio accounts payable/ equity was
nearly 11 times, felt into hard financial imbalance, the risk of bankruptcy, stagnated
production, workers change djobs, nearly 17,000 people gave up job, nearly 5,000
people lost their job.
Getting many difficulties and suffer many mistakes mentioned , however, the
Group has not reported

the financial situation of enterprises honestly., For

example,lossing 1.6000 billion in 2009 but reported that having 750 billion interst.
Along with that is the finding of violation with criminal signs, but not be handled and
stopped in time, typically the "Over 11 times of inspection, the audit found violations as
widespread investment spread over many areas not related to corporate functions,
inefficient, heavy losses; financial situation faces with bankruptcy, sluggish production,
the complicated internal situation "has made consequences more serious.
3.2 The result of the incident:

- Causing loss of more than 4 billion USD venture belong to state.
- Affect the workforce of corporations, nearly 17,000 workers give up , nearly 5,000
people lost their jobs.

11


- Reducing prestige on borrowing on interest of Vietnam enterprises on international
markets, Vietnam is downgraded national credit trusting due to Vinashin.
- Delaying the development of Vietnam marine economy because

Vinashin has

accounted for almost the entire market share providing technical equipment for this
sector for a long time.
- The debts of Vinashin create cost burden for monetary policy and fiscal policy, thereby
creating a line resulting influencing

many businesses both within and outside the

National Business
3.3 The cause of the incident:
3.3.1 Objective reasons:
- The

world economic crisis 2008-2009 make the world economy

decline

sharply, the economy of our country are greatly influence . Dosmestic and foreign

economic Corporations are stormy, go bankrupt and need hands of the Government to
revive. Economic crisis has made the financial situation of Vinashin serious, especially
on markets and capital. The loans due to date repeated without solvency.
- Banks tightened lending, investment projects being implemented could not
complete to enter in manufacturing due to lack of capital. Many shipbuilding contracts
signed could not continue to get loans to finish on schedule. Ocean trafic industry was
brought to a standstill, the master canceled the contract and the shipbuilding agrement
worth more than 8 billion USD. In 2010 ,the shipbuilding contracts were likely to be
canceled coming up to 700 million USD.
Shipbuilding market and shipping on worldwide felt dramatically. From 1999 to
2007, the world shipbuilding industry thrived with a total tonnage of new bulidingship
by 51% of total load of the total active flotilla in the world. In 2008, the marine
transport business was brought to standstill, the world shipbuilding industry felt into
regression. The total value of new buildingship contracts decreased 38% compared to
2007.Athought the price of buiding new ship halved ,, shipbuilding market came to
standstill, orders plummeted (container

ships decreases 57% , large bulk carriers

decreased 66%), many other ships (natural gas and chemicals transporting) reduced
12


80%,some kind of vessels had few newbuilding contracts. Some shipping companies
must cancel the signed contract. Many of the world shipbuilding firms faced with
bankruptcy

and forced to reduce workforce, narrow investment and production.

Business activities of the Vinashin Group is building, repairing ship and ocean shipping

that was used to have extensive international economic integration depended heavily
on world markets.Therefore, in that context, development, production, business,
financial condition of Vinashin was affected very badly.
3.3.2 Subjective reasons:

 Due to protection
First of all is the responsibility of the Government and the Ministry of Transport the governing body of Vinashin.
State Audit had inspection plan in 2008 but was delayed until 2009 and then
2010.

However,

this

plan

continues to be "delayed" due to
not being approved. Although
Vinashin appear signs of crime
,

it is still covered up.
The next reason is pointed out
that "the State management and
implementation

of

ownershi

rights of the government with corporations in general and Vinashin in particular is still
inadequate, embarrassed. Ministry of Transport has not promptly detected weaknesses in
the operation

 Because of scattered investment , lack of science:
Vinashin had abused position to invest widely,lead to running uncontrollability
Starting from shipbuilding, Vinashin should focus on developing their career before
expanding to other areas. However, Vinashin has invested to encroach on some sectors ‘s
13


territory such as steel, finance, real estate, electricity .... Weak leadership capacity and
the investment not only spreading but also out of control is one of the cause plunging
Vinashin ship.
The inefficient use of capital, the forecast is still inadequate, therefore, the
planning of business and investment plans is not accurate. The project invest too much,
spreads , some project invested by 100% loans, some projects haven’t been entered to
use but must pay interest.
Some typical projects Vinashin showed very poor ability of the management
board of directors of this corporation:
- The Vinashin Oceangoing transportation Company (VNSlines) (subsidiary of
Vinashin) invested over $ 200 million (approximately 3136 billion) to buy 6 the vessel
22 to 26 years old among 9 ships of the this company. Virtually,all of current ships does
not run at all due to damageability, due to be arrested in domestic and foreign ports (due
to lack of money to pay for services or mean technical equipment).
- Building LASH vessel to transport barges: On 22/07/2005, VNS has signed a
credit contract with the Haiphong Development Assistance Fund about 309.896 billion
loan to deploy plan building H165 ship, assigned a job to Nam Trieu Shipbuilding
Company (NASICO) ; and hired Vietnam Registry Department to supervise, issue
dregistration certificate for

ship. NASICO promised to hand over the vessel in

August,2007 but officially handed over to VNS on 2/10/2008. The total cost of building
new ships H165 Lash (was named Lash Gianh River) was about 400 billion.
- Investment in purchasing stock of

Vietnam Insurance Corporation ( Bao

Viet)with a value of 1467 billion; buy 20.4 million shares accounting for 3.56% of
capital with price 70 thousand VND, then the Government asked State Investment and
capital business Corporation to buy back with initial price, although market value at
that time was only 40 thousand VND.

14


- Buy Lotus ship from Italy on 15.10.2007 cost
(

60 million Euro

apprõimately1,300

billion),

running north-south route, now it
stops running because each trip
losses of 1.5 billion VND. Lotus
ship had been in holes at the

bottom in the exploytation time in
Italy, brought back to

repaire

.Now,it is located in the waters of
the

Cam Ranh shipbuilding industrial

company . Although that ship has not run, the engine must be ignited and ship must be
guarded. Annual interest payments is nearly 80 billion.
- Cai Lan Diesel power plant: buy old equipment toassemble and allow the
contractor to be careless in work even Cai Lan Diesel power plant has only 2 active
generator that is 4 generator and 5 generator with 75% capacity

, the other four

generator are broken. After two years of operation (from 4-2007 to 10-2009) Cai Lan
plant lost more than 62 billion, total debt not afforddable to pay came up to 27.58
million dollars and 107.5 billion .

 Because of tort oF leadership in management process
The systematic error due to weak, bureaucratic, authoritarian leadership of leader
of the corporation. Typically,
Mr.

Pham

Thanh

Binh

gathered in his hands absolute
power : Secretary of Party
Committee, Chairman of the
Board, CEO. The hard failure
of

Vinashin

is

due

to

centralized regime, because of
bureaucratic,

autocratic,

immaturity management of the leader of the group.
15


The organization lacks of scientific leading to heavy ,overlaped organizational
structure leads to, there is few close link between departments and subsidiaries.
- The division of work is illogical, typically, Finance and Accounting Department
of Vinashin did not

monitor the mobilization of capital from abroad directly, but

business department assumed instead . When funding was supplemented ,the business
department allocated to the subsidiares, borrowing but not push paying debt, the rate of
progress is sluggish. Finance and Accounting Committee tasked by not grasp the
information should not debt.
- Relationship between subsidiaries is too loose. The companies do not combined
in assiting manufacturing. There is phenomenon in Vinashin :some branches have orders
to bulding ship and in contrast,some branches have too many orders that rate of progess
is not in time, some branches not only have large square but also buy too much materials
and equipment

leading to redudance such as Nam Trieu, Pha Rung shipbuilding

yard,some branches lack of materials and equipment to build ship such as Ha Long
dockyard.
The examination is heedless and there is a lack of internal legal lobby leading to
appearance of serious violations but no be adjusted.

16


PART IV:

EXPERIMENTAL LESSONS ABOUT FINANCIAL MANAGEMENT

TAKEN OUT FROM DEFAULTS OF VINASHIN

Over the causes leading to insolvency of Vinashin mentioned, we can see the mistakes

in the administration in this group is the most important causes. the management of
Vinashin has acquired many serious mistakes obviously. Looking back at the bitter
failure ,we can take out useful lessons
4.1 Lessons about decentralization:
Actual evidence show that the economic groups, corporations and heads of state
corporations, the group is assigned too much power. Once power is concentrated in the
hands will lead to authoritarian, autocratic,

uncontrollable investors. Vinashin has

invested heavily on super projects, purchased wasteful equipment. Typically,
purchaseing Lotus ships worth nearly 1,300 billion but unable to use.
This group not only invested in purchasing material facilities wastefully but also
invested trillion in stocks, shares not belong to its strength.
It all stems from the will of the head group as they have a large concentration of
power transferred from the owner in hand. Therefore, powers need to be separated a
reasonably to prevent autocracy and improve efficientmanagement, complete intended
target.
Controlling the economic behavior of the Group but still create a self-control
corridor for the Group is the lesson that should be answered by the governing body.
4.2 Lessons about investment capital management - to avoid
scattered investment, loss of control:
If taking the reciprocal capital of investors to implement projects, Vinashin will
certainly never have enough financial capacity to perform the super project. Obviously,
the equity of Vinashin (8000 billion) is just too small for the size and scope of
investments which the Group has made. To make the "dream" , Vinashin borrowed huge
trade loans that is risk of potential, adventure. Even must accept risk when doing
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bussiness,but if engage in hazardous activities blindly like Vinashin is unacceptable and
other groups must take out many experimental lessons.
According to data from the audit and from this group, from 2005 to before the
economic crisis world in early 2008, the list of investment projects of Vinashin has
reached the number 257, with total cost of more than 50,000 billion. This amount of
money is not small, but due to the spread, many of them are not granted sufficiently
.Until now, more than three-fourths of the project is still unfinished.
Major lesson taken out is the need of combatting and uncontrollable investment
The spreadout investment not only reflected in the investment outside main bussiness
but also in decisive bussiness.
4.3 Lessons about the inspection and supervision of the
approriate authorities:
As the above analysis, if the management agency and supervisory office combine
with each other skillfully,Vinashin ship will not fall in this situation .If State Auditor
and government

Inspector

have fit coordination mechanisms, or the Ministry of

Transport does not just stop at the hearing false reports of this group . Clearly, the
management body has been passive and not kept pace with every step of this
corporation. Vinashin has invested in a super comfortable with many projects, including
equity capital, both domestic loans and foreign debt. While the management capacity of
the agency's management and the group's leaders did not keep up the excessive
expansion activities that caused serious of issues related to investment management,
liabilities, current money ... It makes vinashin trains faster and faster go to the edge.
Despite what people said, they could not deny the fault of the ministries and agencies for
the collapse of this group..
4.4 Lessons about management capacity:

With over 200 member businesses, hundreds of thousands of venture capital
billion, spread over a wide area from North to South , The size of Vinashin is too large
compared to management ability. Naturally,overload status in management leads to
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suffering losses. Obviously, that “ ability and weakness and shortcoming management
level; formulating and implementing production planning - business and investment
plans is not only too fast but also not suitable with capital and management ability” play
an important role in unsuccessfullness of Vinashin.
Thus, management standard must be enhanced when the size of enterprise is
larger and larger, management standard must catch up with scale,simultanously,should
streamline the organizational structure by means of restructuring to reduce the pressure
for the management of the business.
Part V: CONCLUSION
Vinashin going to the crisis, has both objective and subjective reasons, however, it
is confirmed that subjective reasons stemming

from mistakes in the work of

management corporation,management capability as well as weak , inaccurate forecasts is
main reasons directly causing the failure of Vinashin. Vinashin fails, it causes extremely
large loss, and follow the law of the market it deserves bankruptcy. However, Vinashin is
an important factor in the economic strategy of Vietnam marine economic, "If the
Vinashin goes bankrupt ,will have to rebuild the shipbuilding industry in Vietnam.
Government policy restructuring Vinashin to make it become core of the Vietnam
shipbuilding industry. "although on controversy, solution to save Vinashin ship was
launched. Government policy restructuring Vinashin,in which converts the parent
company - of Vietnam Shipbuilding Industry Group into models one member limited
liability companies hold 100% charter capital by the State, besides , the Prime Minister's

decision is dividing Vinashin into three parts, moving down the debt as well as projects
to Vietnam Petroleum Group (Petrol Vietnam) and

Vietnam Marines Corporation

(Vinalines).
The above solution had some results initially. The project moved on Vietnam
Petroleum Corporation has started again, more than 1,000 (of 6,000) worker quiting at
Dung Quat shipyard returned to work, expected in October 2010 will launched the
104,000 tons tanker. Many ships in the ocean fleet moved on Maritime Corporation
Vietnam has become active again, Recently, the Group has sold four Vinashin ship
building worth nearly $ 110 million (a 53 000 ton ship, a 56,000 tons ship, two 17,000
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tons ) to the customer and transfered some investment projects outside the main sectors
to recover capital; been focusing their efforts to complete the unfinished ship
A "new Vinashin" is being triedto build. " a new Vinashin focusing on key sectors,
will have enoug abilities to overcome the current difficulties. Roadmap for a new
Vinashin is determined: Until 2012,deleting all losses, having interest in 2014 ".
A "new Vinashin" can appear soon in the future, but the lessons about management
corporation from Vinashin in 2010 will be always everlasting . Through this case, we can
see the Administration problem is extremely urgent for any business, it is the decisive
factor deciding the success or failure of your business. To succeed, Administration must
be always taken care of.

REFERENCES

 Report of the Government Office for Vinashin ................... .
 Vietnamese Wikipedia ............................................... ........ .

 Website of Vinashin ............................................... ....... .
 And many other documents from the Internet.

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